Government throws out UPA policy on foodgrain buffer stocks

NEW DELHI: The Modi government is set to reject the UPA's move to boost buffer norms for foodgrains and settle for a lower increase in the minimum stock maintained with Food Corporation of India to meet the requirements of Food Security Act rollout besides meeting exigencies to regulate prices in the domestic market.

Sources said the cabinet committee on economic affairs that is scheduled to meet on Friday is expected to clear the plan for revised buffer norms for foodgrains. The BJP government is looking to raise the buffer norms by up to 50%, while UPA had proposed to step up the minimum stock requirement by over 60%.

Higher buffer norms would help the government meet the commitment under the Food Security Act, which promises 5 kg of grains per person every month at Rs 3 and Rs 2 per kg for rice and wheat respectively. The scheme will cover two-third of the population.But it also means higher burden on the government by way of not just higher subsidy but for maintaining the additional stock of grains.

An official said lowering the buffer stock norms from the UPA-propopsed level will also have financial implications since FCI incurs expenditure of Rs 25-32 crore as carrying cost to hold 1 lakh tonnes of wheat and rice annually. The NDA is keen on better targeting of subsidies and has signalled its intent through a decon trol of petrol and diesel prices and is urging the well-off to give up subsidized cooking gas connections.

Lower buffer norms will also encourage private players who feared that higher procurement will drive them out of the market.

According to government sources, the changes have been made after the Prime Minister's Office recommended to the food ministry that the buffer stock should not be for more than two months. Earlier, there was a proposal to keep the advance stock for three months for meeting oper ational requirements such as supplying through the public distribution system in emergencies like drought.

While the UPA government had proposed to keep the minimum stock at nearly 32 million tonnes (MT), the new proposal is to maintain the present norm of 21 MTs.

Similarly, against the earlier proposal of fixing maximum limit on buffer stock at 52 MTs, it will now be only 41 MTs.

“But usually the stock with FCI at any point of time is much more than prescribed by laid down norms.Once the government approves new quantum of buffer stock, the excessive quantity can be exported or sold in the open market,“ said a government official.

At present, the government has fixed buffer norms for January, April, July and October. The buffer stock norm was previously revised in 2005.